Since bonuses were introduced by law firms in the late 1990s as a way to limit the long-term effects of salary inflation, amounts paid out — and the hoops that assistants have to jump through in order to get their hands on the cash — have varied wildly between firms.
Some firms give tens of thousands of pounds to assistants regardless of individual performance, while others require Olympian levels of all-round commitment in return for sums that could probably be more easily obtained through a few after hours’ shifts at the local pub.
We take a look behind the main bonus systems operating at the major City and regional firms and assess what the future of bonuses in the legal world is likely to be.
The chargeable hours bonus
Number of hours billed is the obvious way to calculate a bonus — so obvious, in fact, that you wonder what could possibly go wrong…
SJ Berwin found out the answer to that question a couple of years ago when it offered assistants incentives to bill 2,500 hours a year — and found itself with a near-mutiny on its hands. The exhaustion-inducing target was subsequently revised, but the ensuing negative publicity caused lasting damage to the firm’s reputation.
Wary of suffering similar consequences, firms that base their bonuses on chargeable hours are now careful to set their targets below the 2,000 hour mark. Still, there is a lingering unease about formulating payments according to number of hours billed.
Allen & Overy corporate partner Alan Paul says firms that operate on this basis are “counting the wrong measure”, while Denton Wilde Sapte chairman James Dallas believes that such a system places “a disproportionate premium on graft”, at the expense of other more important factors, such as the ability to produce quality work or bring in business.
The ‘we don’t believe in hours targets’ bonus
Increasingly law firms are dropping the focus on billable time and instead using multiple criteria that assess a range of different skills to determine bonus payments. Notable devotees of this approach include Freshfields Bruckhaus Deringer, which pays out a reported average bonus of around £20,000 to its assistants, and Olswang, which offers between 5% and 20% of annual salary. Factors assessed include technical skills, teamwork, client handling and wider contributions made to the firm as a whole.
Downsides of the ‘we don’t believe in hours targets’ bonus include the smugness it engenders in its disciples, the annoying criteria names (Pinsent Masons’ ‘Going the extra mile’ particularly grates), and the difficulties of ensuring consistent interpretation of said annoying category names.
“Assessment using subjective criteria requires a lot of human resources (HR) and management time,” admits Olswang HR director Ffion Griffith.
The investment bank-style bonus
The system favoured by the top
Detractors draw attention to the potential for feeling hard done by when the slacker sitting opposite earns the same cheque as you despite clocking off at 5pm on the dot everyday. Those in favour point out that few such people tend to be found at the type of institutions that award bonuses according to this principle.
And even if there is any perceived unfairness, the amounts paid — the norm for senior associates at Cleary Gottlieb Steen & Hamilton, for example, is said to be over £30,000 — are usually enough to keep assistants content.
The bonus with a difference
Notable recent innovations include Pinsent Masons’ ‘trainee bonus’ (a maximum of £5,000 determined according to end of year assessment, payable to both first and second year trainees) and CMS Cameron McKenna’s quarterly bonus system, which allows lawyers to intersperse manic periods (the quarterly target is 400 hours) with more relaxed spells and still get rewarded. Camerons’ bonus pays out either in cash — a maximum of 20% of salary — or extra time off.
Both schemes, which come with affectionate messages of ‘valuing young talent’ and ‘being fair to junior lawyers’, have been received, on the whole, fairly positively — although one Pinsents’ trainee pointed out that while he and his colleagues saw the bonus as ‘nice’, they weren’t going to “go crazy for an extra couple of grand.”
Allen & Overy’s take on bonus innovation is rather less matey. Struggling with high attrition rates, the firm has opted for a more hardline approach — last year implementing a lock-in policy in which payment of all bonuses is deferred until 15 months after their initial award.
What bonus?
Several firms do not operate a bonus system at all. A spokesperson for bonus abstainers Jones Day says: “We feel that paying a generous base salary is fairer than offering bonuses in the long term.” Shoosmiths is another significant non-bonus payer.
So what does the future hold for law firm bonuses?
Ashurst HR director Stuart Walker believes the development of reliable systems to judge assistants’ performance will see multiple criteria-determined individual bonuses come to dominate.
However, Eversheds managing partner David Gray expects the collective, investment bank-style bonus to become the norm as firms increasingly reward individual performance through merit-determined base pay.
“With salary increasingly taking merit into account, the only reason to keep bonuses would be to encourage some kind of connectivity with firm performance as a whole. Indeed, if you look at other industries, that is the direction most appear to be going in.”
One thing that most senior figures within the legal profession agree on is that bonus sums are unlikely to rise much beyond the average 5%-15% of earnings at which they currently stand — and will almost certainly never reach the sort of sums paid out by investment banks. Still, according to Pinsents’ HR director Jonathan Bond, that is not necessarily such a bad thing.
“Very large bonuses tend to go alongside hire and fire cultures,” he says. “Law firms are steadier, which is surely something to be grateful about in the current economic climate.”
The perks of legal life
The rewards offered to busy lawyers extend beyond salaries and into all sorts of gratis goodies. Legal Week casts its eye over some of the more bizarre perks on offer, from beauty treatments to free chocolate bars.
Flu jabs — free for the elderly, infirm and… er… assistant solicitors at Herbert Smith, Lovells and Beachcroft.
Complimentary fruit — Dechert, McGrigors and Hill Dickinson prefer to boost their assistants’ immune systems through all-you-can-eat fruit policies. Mindful of the dangers of vitamin C overload, Reed Smith takes a more cautious approach — offering a “nutritious snack” every Friday.
Will writing surgeries — If the flu jabs and fruit don’t appear to be doing the trick, embrace your mortality, bill like crazy in the time you’ve got left and concentrate on leaving a fat wedge of expertly drafted legacy to friends and loved ones, courtesy of Berwin Leighton Paisner’s will writing surgeries.
Sleeping pods — Work so many hours that you’ve forgotten what your partner looks like in daylight? Well, why not ditch them, sell your flat and move into the office full-time! Lovells and Ashurst have boarding school-style facilities just waiting to be taken advantage of.
Stress counselling — For those worried about becoming a statistic in the next wave of job losses, salvation comes in the form of the professional counselling services provided by Cadwalader Wickersham & Taft and CMS Cameron McKenna.
On-site Starbucks and bar — Clifford Chance favours the old-school approach to keeping happy and healthy: a shot of caffeine to perk you up early doors, some high calorie, cream-filled snacks as a spirit-raising treat around noon, followed by a double scotch to settle you down at the end of the day.
Shoe shining — “Oh my God! You can’t possibly meet the client in those dirt-encrusted old things!” Fortunately, if you’re an assistant at Cadwalader or Trowers & Hamlins, help is at hand.
New age therapies — Withers offers Alexander technique and reflexology, Wragge & Co provides yoga classes, while SJ Berwin has a ‘wellness centre’. Reports (unconfirmed at the time of going to press) described a Goa-style retreat behind some velvet curtains in the corner of the corporate department.
Beauty treatment — Weil Gotshal & Manges, Freshfields Bruckhaus Deringer and Clifford Chance all have their very own Gok Wans on call to make sure their assistants don’t look too haggard.
Free vending machine food after 7pm — Eschewing flashy perks, LG offers… free Hula Hoops and Twixes if you work late. Doubtless, the place is packed in the evenings.
